Exemption notification construed by plain language: ethylene gas used indirectly in manufacture can qualify where direct incorporation is not required.

An exemption notification must be construed on its plain language, and the phrase "used in the manufacture" may extend to material used indirectly in the manufacturing process where the text does not require direct incorporation into the final product. On that construction, ethylene gas used as a refrigerant to obtain the low temperature necessary for separation and removal of hydrogen chloride was treated as use in manufacture, even though the gas did not become part of the finished chemicals. The gas was therefore regarded as eligible for exemption under Notification No. 276/67-C.E.

---

---

Issues: Whether ethylene gas used as a refrigerant in the manufacturing process of chemicals could be treated as goods used in the manufacture of the end products so as to qualify for exemption under Notification No. 276/67-C.E. dated 21-12-1967.

Analysis: The entitlement to exemption depended entirely on the language of the notification. The expression "used in the manufacture" was construed by reference to the text of the notification itself, and the presence of an express exclusion for fuel used in an internal combustion engine indicated that the exemption was not confined only to materials directly and wholly absorbed into the final product. The Government also relied on the principle that, where the plain terms of an exemption are satisfied, the benefit cannot be denied on a supposed contrary intention. On that approach, ethylene gas used to obtain the low temperature necessary for separation and removal of hydrogen chloride in the manufacturing process was treated as use in manufacture, even though the gas itself did not become part of the finished chemicals.

Conclusion: The ethylene gas qualified for exemption under Notification No. 276/67-C.E. dated 21-12-1967, and the revision application was allowed in favour of the assessee.

Ratio Decidendi: An exemption notification must be construed on its plain language, and a material used indirectly in the manufacturing process may qualify as being used in manufacture where the notification does not require direct and complete incorporation into the final product.

---